Limited Scrutiny Notice

#81
unfortunately that is not how it works. because once you go under 44AD, the profit will be computed at 8% of the turnover. So if the turnover is Rs 8 lakhs, the profit should be minimum 64K. now as you may see the overall tax impact is not much. But the tax office can levy penalty for concealment of income etc.
I have not filed ITR 4S, but filed ITR 4. According to zerodha my turnover is arounf 1.8 crore due to option premium calculation. But if we count only sum of positive and negative, it comes to 8 lacs.
 
#82
Thats it
I knew that you were not disclosing your full details.

Bhai, unless you did not disclose full details, how one will help you and moreover no will not entertain you piece by piece queries, again and again..
BTW, do you know how to calculate TO for option trading. I dont think you know it.

In my view, you are in a great trouble, by posting wrong TO and that too by a good difference. IMO, audit was compulsory in your case.
So it will be better for you to contact for some expert advice.
 

canikhil

Well-Known Member
#83
I have not filed ITR 4S, but filed ITR 4. According to zerodha my turnover is arounf 1.8 crore due to option premium calculation. But if we count only sum of positive and negative, it comes to 8 lacs.
well, the expanse of your issues keep expanding. I suggest that you submit the audit even now. the good thing is that the turnover is above Rs 1 cr. So 44AD is anyway ruled out. Ask the officer permission for revision of return and submit audit report. This should help you cover for all the mistakes.

However, It will cost you a bit as the audit will be done under 44AB instead of provisions of 44AD.
 

mmca2006

Active Member
#84
well, the expanse of your issues keep expanding. I suggest that you submit the audit even now. the good thing is that the turnover is above Rs 1 cr. So 44AD is anyway ruled out. Ask the officer permission for revision of return and submit audit report. This should help you cover for all the mistakes.

However, It will cost you a bit as the audit will be done under 44AB instead of provisions of 44AD.
Nikhil , just turnover aspect as stated by you more than 1 crore is not clear to me. According to him, his turnover was 8 lac ( profit + Loss ) and 8% thereof i.e 64000/- should be shown as business income u/s 44AD but he has shown 40000/- , which is less than 8 % , so Audit was compulsory u/s 44 AD. But according to you Audit covered u/s 44 AB as his turnover is more than 1 crore. How his turnover goes above 1 crore ? Kindly elaborate.
 
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#86
Thats it
I knew that you were not disclosing your full details.

Bhai, unless you did not disclose full details, how one will help you and moreover no will not entertain you piece by piece queries, again and again..
BTW, do you know how to calculate TO for option trading. I dont think you know it.

In my view, you are in a great trouble, by posting wrong TO and that too by a good difference. IMO, audit was compulsory in your case.
So it will be better for you to contact for some expert advice.
Sir, if everybody calculates TO according to zerodha rule, all option trader will have to do audit of their account. Which formuula is right?
1) According to zerodha -
  1. 100 Nifty Dec 8000 puts bought at 100 and sold at 50 on Dec 3rd. Another 100 Nifty Dec 8000 puts bought at 50 and sold at 30. Determine turnover
    Average of Nifty Dec 8000 puts buy: 200 puts at 75
    Average of Nifty Dec 8000 puts sell: 200 puts at 40
    Total profit/loss = 200 x Rs 35 = Loss of Rs 7000
    Total Selling value of options = 200 x Rs 40 = Rs 8000
    Total Turnover for Dec 8000 puts = Rs 7000 + Rs 8000 = Rs 15000

  2. Calculation by me (& many like me, i think)
    100 Nifty Dec 8000 puts bought at 100 and sold at 50 on Dec 3rd. Another 100 Nifty Dec 8000 puts bought at 50 and sold at 30. Determine turnover
    Average of Nifty Dec 8000 puts buy: 200 puts at 75
    Average of Nifty Dec 8000 puts sell: 200 puts at 40
    Total profit/loss = 200 x Rs 35 = Loss of Rs 7000
    So, turnover is +7000 rs. (Not adding premium received by sell)

    Which one is right?
 
#87
First of all, TO is to be calculated on trade wise and not taking averages.
Moreover, your calculation is not right

As per ICAI rules
TO for an option trade is calculated as total of
profit or loss of the trade plus the sell value of the option
and this method of calculation has been adopted by IT deptt.

Though I can understand that some fool (or group of fools) has drawn this method of calculation, not knowing anything about option trading, the different ways of trading options and so totally ridiculous. But we cannot change it, when it has been adopted by IT department, whether right or not.

No one is concerned about it, whether this method gives highly inflated value of TO. Sab lakir ke fakir hain, koi raasta nahin hai.
 
#88
First of all, TO is to be calculated on trade wise and not taking averages.
Moreover, your calculation is not right

As per ICAI rules
TO for an option trade is calculated as total of
profit or loss of the trade plus the sell value of the option
and this method of calculation has been adopted by IT deptt.

Though I can understand that some fool (or group of fools) has drawn this method of calculation, not knowing anything about option trading, the different ways of trading options and so totally ridiculous. But we cannot change it, when it has been adopted by IT department, whether right or not.

No one is concerned about it, whether this method gives highly inflated value of TO. Sab lakir ke fakir hain, koi raasta nahin hai.
Me too, was not knowing the same details and thought zerodha is fool. So, calculated on myself only, as it was last day to file return - 31st March 2017 (for FY 2014-15- 2 yrs later). And thought jo bhi hoga dekh lenge. Magar audit karana padta hai aisa to pata hi nahi tha. Aur audit na karaane ka itna bada (150000/- Rs. if i am not wrong) fine hai woh bhi nahi pata tha. Har bar fine bharna hi padta hai ya phir kuch settlement bhi ho sakta hai kya? Any one can guide me ??
 
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canikhil

Well-Known Member
#89
Nikhil , just turnover aspect as stated by you more than 1 crore is not clear to me. According to him, his turnover was 8 lac ( profit + Loss ) and 8% thereof i.e 64000/- should be shown as business income u/s 44AD but he has shown 40000/- , which is less than 8 % , so Audit was compulsory u/s 44 AD. But according to you Audit covered u/s 44 AB as his turnover is more than 1 crore. How his turnover goes above 1 crore ? Kindly elaborate.
he is grossly understated his turnover in options. It is almost 1.8 crores as stated in his later posts.
 

canikhil

Well-Known Member
#90
Me too, was not knowing the same details and thought zerodha is fool. So, calculated on myself only, as it was last day to file return - 31st March 2017 (for FY 2014-15- 2 yrs later). And thought jo bhi hoga dekh lenge. Magar audit karana padta hai aisa to pata hi nahi tha. Aur audit na karaane ka itna bada (150000/- Rs. if i am not wrong) fine hai woh bhi nahi pata tha. Har bar fine bharna hi padta hai ya phir kuch settlement bhi ho sakta hai kya? Any one can whatsapp or PM me on my number thats 9727713237, to guide me.
how you settle with the tax officer is also very important. Don't settle without correcting the issues involved. so first get the audit done and settle only to avoid penalties for late audit etc.
 

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